Fast Market Research

New Market Study Published: Mexico Oil & Gas Report Q3 2012

Boston, MA -- (SBWIRE) -- 08/10/2012 -- BMI View: We expect Mexico to slow the rate of production decline that has plagued its vital oil sector over the short term, but that the downward trend will persist without new discoveries or further sector reform - potentially seeing the country turn into a net oil importer by the end of the decade. The Calderon administration has had some success pushing through liberalisation measures but has not gone far enough. With the favoured candidate in the upcoming 2012 elections, Enrique Pena Nieto, advocating further reforms, the elections could prove a crucial turning point for the sector.

- BMI forecasts that oil and liquids production will fall slightly from 2.96mn barrels per day (b/d) in 2011 to 2.95mn b/d 2012. Oil and liquids will continue to decline from 2012, falling to about 2.72mn b/d in 2016, a fall of about 8% from 2011. Oil consumption over the same period is expected to rise at a moderate rate, reaching 2.25mn b/d by 2016, implying net exports of 467,000b/d.
- Gas output is forecast to remain essentially flat over the coming years. Gas production is projected to expand from 46.80bn cubic metres (bcm) in 2011 to 49.41bcm in 2016. This will do little to reduce import needs, however, as consumption is forecasted to rise rapidly from 61.29bcm in 2011 to 76.62bcm in 2016, implying an import requirement of nearly 30.00bcm by 2016, about double the 2011 import requirement.
- The long-term forecast for Mexico's oil sector is dire. Oil production is seen continuing its downward spiral, falling to under 2.50mn b/d in 2019 before reaching 2.30mn b/d in 2021. Meanwhile, a healthy economic growth outlook is expected to see consumption rise by between 1-3% per year. That trend sees consumption exceed production for the first time in 2021, with an implied net import requirement of more than 113,000b/d for that year.
- This would mark a dramatic turnaround for the country considering that exports peaked at 1.80mn b/d in 2003 and the country was exporting more than 1.00mn b/d as recently as 2008. There is still plenty of time for Mexico to alter this long-term trend, but without more urgency in oil sector reform and new exploration efforts aimed at tapping deepwater Gulf of Mexico reserves the country faces the loss of crucial oil export revenues.
- Unless the government introduces a radical shift in energy policy, we expect state-owned Petroleos Mexicanos (Pemex) to retain full responsibility for oil production, with limited international oil company (IOC) involvement.

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